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Continued from page 2

Uber briefly was taking a 5% cut in a handful of cities before restoring that to a 20% cut in them. Even on UberX, it is certainly profitable on a per-ride basis at 20%. The higher tiers (Uber Black, Uber XL, Uber SUV) have similar commissions, but higher fares, giving Uber more money for doing the exact same thing. Nice work if you can get it.

Lyft has only recently entered the higher tier business and barely has any cars in it. Not good.

There's a war for drivers right now; Uber is better able to sustain this war and appears to be dominating the early rounds.

Both services are aggressively courting the drivers of the other, offering things like $500 bonuses to start driving and guaranteed minimums per hour during peak times. But Uber's offers are nearly always better. And it can sustain them more often. One might read this as "well, maybe Lyft doesn't need those offers." That would be a bad read.

The streets of San Francisco are this battle in microcosm. They are covered with Ubers. Yes, there are Lyfts, even lots of them. But the ratio is not likely close.

Uber's Travis Kalanick says, "We do 10 times more trips than them and on a booking basis we're 20 times bigger." He is speaking in aggregate, of course. And Uber's international advantage is likely huge right now. But even at Ground Zero -- where this all began -- in San Francisco, the advantage is big. The purple mustache is out there, but the "blue U" might as well stand for ubiquitous (keep in mind, most Ubers run without it, in "stealth," for various reasons).

Note that Kalanick telling drivers he looks forward to replacing them with Google cars is also foolish, even if its true. Urban autonomous vehicles that can act as robo-taxis are still years away and might take years beyond that before they are ubiquitous. Drivers are a critical asset and alienating them would create another strategic vulnerability. Lyft's decision to treat drivers like a "community" and hold events for them is clever. Will it be determinative? Probably not.

You don't want to kill your prey when you can toy with it.

Some years ago, a senior executive of a major supermarket chain explained to me that they could -- at any time -- crush a major rival. The rival was less well capitalized and managed, not to mention smaller. But if they finished it off, the regulators would suddenly have much more reason to pay attention to the vanquisher.

Who needs that kind of attention, especially when you're (a) at odds with regulators across the globe (b) actually unable to grow fast enough yourself to satisfy all the demand you've created (c) absolutely unconcerned that your inferior supermarket competitor, er ridesharing company, can possibly take meaningful share from you in any important market?

Answer: Not Uber. It will not engage in a price war from here with Lyft, because it's actually counterproductive. Lower prices mean lower wages for drivers, which are not helpful. Yes, Uber can use wage guarantees, but drivers can see those as short term if they are too far removed from the underlying earnings potential. Also, lower prices that you don't have cars for are equally pointless. Lower prices that lead to high surge multiples are pointless.

Uber will keep expanding. It will keep offering new customer and new driver promotions. It will match any move Lyft makes to take its customers or drivers. It will begin to market itself more aggressively, via partnerships with credit cards, travel companies, events, etc.

This service will lend itself to a very strong "winner take most" situation where either Lyft will carve out a niche as the service for younger customers who like kibbitzing with their drivers and sitting up front prefer to go or it will eventually be swallowed by some other transportation company (think auto maker, car rental firm, logistics company).

This statement in Business Insider is not wrong, but it is misleading: "But if Lyft can establish itself as a solid competitor to Uber, the already far-fetched idea of Uber getting a $100 billion valuation will never ever happen." Lyft is a solid competitor to Uber. But it's much smaller and much less well capitalized. And it's saddled with this weird brand.

Using its limited assets of driver solidarity and even passenger solidarity -- the fist bump-ee feels s/he is part of the community too -- Lyft can carve out a piece of the pie. But it's unrealistic to believe that pie is going to grow beyond a minority slice.